Sabana REIT's 9 Tai Seng Drive (Photo: REITsWeek)Sabana REIT's 9 Tai Seng Drive (Photo: REITsWeek)

Despite giving assurances that it will be conducting a review of its business, the embattled manager of Sabana REIT is facing repeated calls from a group of unitholders to step down.

Sabana REIT announced on 2 February that it will undertake a “strategic review” of its operations, including current shareholding structure, management, as well as its general business direction.

The announcement came amid rising discontent from a group of unitholders who have been expressing their dissatisfaction over the REIT’s performance, and are calling for a change in its management team.

“The sponsor and the manager are considering all options to further the sustainable growth of Sabana REIT and the interest of its unitholders”, said the REIT in a statement on the review on 2 February.

“In the meantime, the manager remains fully committed to executing its duties to proactively manage the trust and deliver value to unitholders”, it added.

However Koh Yee Kan, a 38-year-old Assistant Professor at the National University of Singapore, described the promises of a strategic review as words that need to be followed through with real actions to demonstrate sincerity, and called on the REIT’s manager to consider a list of recommendations by unitholders to rectify the situation.

Besides a removal of its manager, unitholders are also calling on the Singapore-listed industrial REIT to rescind its three most recently announced acquisitions, and deploy funds raised to repay debt, or buyback units from the market instead.

“Note that the values of the properties have dropped below the sale price, even before the transaction is completed”, claimed Koh, who described the decision to fund the acquisitions via rights issues as one that will continue to put a drag on DPU.

“It seems that the only party that benefits is the manager, and maybe the sponsor, and I don't know how this can be for the best interests of the unitholders in general”, said Koh, in a correspondence with REITsWeek.

Other recommendations that have been forwarded include a proposal to associate the REIT’s management fee with DPU performance over consecutive years, the appointment of more independent directors, and a suggestion for unitholders to vote on acquisitions that comprise more than 3% of the total book value of the REIT.

According to Koh, the unitholders have submitted these proposals to the Monetary Authority of Singapore (MAS), and are now awaiting a response from the regulatory body before taking further action.

Units of Sabana REIT finished the last trading session about 10.4% higher from the previous close on the Singapore Exchange to end at SGD0.425.

Read: Sabana REIT faces calls for management change amid questions over performance and Sabana REIT addresses concerns over performance, manager compensation.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.